10 Things Rental Car Companies Won’t Say

1. „We’re a tax magnet”

Rental-car customers are paying more, due to an unprecedented slew of taxes and fees. But that extra money doesn’t go to the rental car companies; it goes into city and state coffers, where it’s used to fund municipal projects. For example, in 2005 car rentals in Arlington, Tex., were hit with a 5 percent tax to help pay for the new Dallas Cowboys stadium. Car rentals get tapped as fund-raisers because local politicians won’t feel the repercussions at the voting booth. „They’re taxing people who are flying in from someplace else,” says a Hertz spokesperson. „These people can’t and don’t vote locally, so there’s no harm for them.”

But there’s a way for consumers to dodge some of these fees: Pick up your car in town, not at the airport. In 2005 Travelocity found that taxes and fees were 45 percent lower for off-airport rentals. An added bonus, according to Neil Abrams, president of Abrams Consulting, is that you’ll save on rates, too: On average, they’re $10 cheaper per day in town.

2. „We track your every move.”

Over the past few years, rental agencies have begun to install GPS devices in their vehicles. These units allow companies to track cars that are lost or stolen. But global-positioning technology also lets them know when a renter has been speeding or has taken a car into another state, which may be construed as increasing wear and tear. „Opportunity for a rental car operator to impose geographic limitations was never pitched by GPS sellers, but was discovered coincidentally,” says Michael LaPlaca, an attorney who specializes in rental car law.

To date, most companies don’t use the technology to impose fines, but it can and does happen. American Car Rental, for example, was charging customers in Connecticut $150 each time they topped the speed limit for two minutes at a stretch, claiming it damaged their vehicles. Connecticut’s Consumer Protection Commission deemed the fines excessive, ordering the company to refund penalized customers, and in 2005 the state’s Supreme Court affirmed the decision. (American Car Rental has since gone out of business.)

Since then other states, including New York and California, have passed laws preventing rental car companies from imposing such penalties. But some still try to get away with it: In 2006 California’s attorney general announced a settlement of over $700,000 in a consumer protection lawsuit against Fox Rent A Car for using GPS to illegally charge customers who traveled outside a three-state area and for forcing customers to purchase liability insurance.

3. „Our prices are etched in sand.”

Trying to find the best rental deal can be frustrating, since rates can fluctuate dramatically from day to day, even minute to minute. „Prices are constantly changing,” Abrams says. That’s because rental car agencies use something called yield-management technology, which continually adjusts pricing depending on how many cars are available. A sudden rash of cancellations or bookings, for example, can push rates up or down. When we priced an Enterprise rental for a spring trip to Los Angeles, the cost vacillated dramatically: Two hours after we first checked the company’s website, the per-day rate for a full-size car dropped almost $8, and over the next week it continued to yo-yo dramatically, with a range of $40. („There are any number of reasons why the price of a rental car can fluctuate,” says a spokesperson for Enterprise. „During weekend specials you may see savings up to 50 percent; renting during the week could cost you more.”)

Even the way you book can affect prices. When we called the Avis desk at LAX to reserve a minivan, we were quoted a price more than $150 higher than the amount being advertised simultaneously on the company’s website. Also, online travel agencies like Orbitz or Priceline can have completely different prices. That’s why it pays to comparisonshop and check back later to see whether rates have fallen—there’s usually no fee to cancel a reservation or rebook at a lower rate.

4. „You probably don’t need our insurance.”

Most companies make reserving and renting a car pretty simple—until it comes to the issue of insurance. That’s where they offer a bewildering array of supplemental coverage, which can easily add $10 to $30 to your daily bill. What the overeager reps won’t tell you is that you may already be covered, either partially or completely.

There are two major types of insurance you’ll want: a collision/damage waiver and liability. The former covers repair and replacement costs to the car should anything happen to it; the latter protects you from lawsuits if you’ve injured anyone or damaged property when driving. If you have auto insurance, it usually extends to rental cars, providing both collision/damage and liability, as long as you’re on a leisure trip. And many credit cards cover damages to the vehicle but don’t offer liability.

As with any type of insurance, it’s always more complicated than it seems. „You shouldn’t assume you’re covered by your credit card,” says a spokesperson for the Insurance Information Institute. Check ahead of time with both your credit card and auto insurance providers to see if, when, and how you’re covered.

5. „Your reservation doesn’t mean bupkes.”

Andy Parker was looking forward to spending his winter vacation exploring the back roads of Aruba. He even reserved a Jeep with Hertz to handle the rough driving conditions. But when he went to pick it up, he was told all they had on the lot was a sedan. „It was a sore spot,” says the Buffalo, N.Y., meteorologist, who got stuck with a small Nissan.

As Parker found out, a reservation isn’t a guarantee. The rental agreement is contingent on availability. In fact, you’re not reserving a specific car model, but simply a class of car. (One exception: Hertz allows you to reserve high-end models in its „Prestige Collection.”) What a reservation actually means is that the company is supposed to have some kind of vehicle on the premises for you to rent. So if you get a smaller car than what you reserved, be sure to ask for a rate adjustment. (Parker got Hertz to take 20 percent off his bill; Hertz did not return our calls for comment.)

If the lot is empty, the company is supposed to find you a car even if it means calling another agency and covering the difference. So if the clerk doesn’t offer, remind him that the company is liable if you wind up paying more for a rental car elsewhere.

6. „Special orders are our bread and butter.”

Just like supermarkets, rental car companies bank on getting their customers to do some impulse buying at the checkout counter—where you can now choose from a sizable menu of à la carte amenities and services. The strategy seems to be working: 2007 revenue reached $21.5 billion, a 21 percent increase since 2002, according to Auto Rental News.

A spokesperson for the American Auto Association says that a rental vehicle tricked out with extra features could run you $20 more a day. Here’s how it breaks down: GPS with turn-by-turn directions costs about $12 a day. Avis and Budget rolled out a service that for a minimal amount each day will let you pay highway tolls electronically—but that fee doesn’t include the tolls themselves. And if you want a baby seat for the minivan, add another bill to the pile.

Companies have also begun pushing specialty cars. In 2007 Avis introduced its „Cool Car” collection, which includes the Nissan Altima Hybrid, Cadillac CTS, and Hummer H3. And even low-priced Thrifty has a „Beyond Luxury” collection, offering cars like the BMW 5-series and Cadillac Escalade. „It can be a place to make money,” the AAA spokesperson says.

7. „You’ve got to do a little detective work to find a good deal.”

It used to be that better deals were to be had at smaller, independent rental car companies. But with rising energy prices and weakening demand, that’s no longer true. In fact, the changing rental car landscape is making it any company’s game to pitch a bargain—which means it’s more important than ever to shop around for the best deals.

Good to know, since rental car rates—which remained relatively flat after 2000—have begun to rise again. The average daily cost of a rental was $73 in the second quarter of 2008, a 3 percent increase over the year before, according to American Express Business Travel.

So how to find a bargain? Your best bet is to hit the Internet: Expedia.com and Orbitz.com offer reliable online comparison-shopping tools for rental car companies at locations near you. A recent search of Orbitz.com, for example, turned up a $230 weekly rate for an economysize car from Budget’s location at New York’s John F. Kennedy International Airport—that’s nearly half of what Avis was charging ($458).

8. „We’re cutting corners anywhere we can.”

You may not have noticed, but over the past few years the fine print on rental contracts has been changing, restricting privileges and perks, even for the industry’s best customers. For example, in the winter of 2005, Hertz shortened the grace period for returning a car from one hour to half an hour for everyone including its #1 Club Gold members; customers also can no longer return a car after a location has closed for the night without incurring a late fee. (Hertz did not return our calls for comment.)

In another move to cut corners, rental companies across the board have begun making customers liable for damage caused by so-called acts of God, such as hurricanes and floods. Avis and Budget, the last major holdouts on this policy change, have recently added it, even to their frequent renters’ contracts. The new rule means it’s now up to renters either to return a car before the natural disaster hits, drive the vehicle out of harm’s way, or pay up for the newly developed insurance option to cover this type of damage.

9. „You won’t believe what we’re charging for fill-ups.”

Even when Brandon Harris is in a hurry, he tries to gas up before returning his rental car. When he was on vacation in Costa Rica a few years ago, he had to travel 15 minutes out of his way to find an open station. I don’t think the rates that [rental agencies] are charging are fair,” the Chicago resident says. It’s cheaper to do it yourself.” Although most car rental companies claim they charge the same for gas as local market conditions, it’s really the service charge that jacks up the price: You’re paying for fuel plus the luxury of not having to pump it yourself, says an AAA spokesperson, and not filling up the tank can tack on an additional $20 to your bill.

Car rental companies do offer another option: prepaying for a tank of gas at a more reasonable rate so you don’t have to worry about finding a station at the last minute. There’s only one problem: You’re not likely to return the car empty. Whatever gas you leave in the tank is a donation to the rental car company,” the AAA spokesperson says. So unless you’re tight for time, it still pays to gas it up yourself upon return. But watch out for gas stations right next to the airport, since they tend to have higher prices. These pumps make a killing on out-oftowners filling up rental cars,” the AAA spokesperson says.

10. „We offer some terrific deals—on Thursdays when the moon is full”

Jay Winger thought he’d found a great deal. He was planning to use a Budget double-upgrade coupon when he rented a car for his Las Vegas vacation. The coupon had been accepted when he made the reservation online, but when he arrived at the rental desk, the agent refused to honor it. Why? At the bottom of the coupon in „really small print,” Winger says, it stated that the coupon wasn’t valid in all areas— including, as it turned out, Vegas. „There are always certain locations that don’t take part in national promotions,” says an Avis Budget Car Rental spokesperson. Winger wound up spending about $60 more than he had planned. „Renting a car is really tricky,” the Minneapolis native says.

On every rental car company website, there are ads flaunting the companies’ latest deals. Not to mention the paper coupons that appear regularly in newspapers. But there are so many rules and restrictions involved that it’s often impossible to get exactly the deal that’s being advertised. For starters, some require a Saturday-night stay or a minimum five-day rental. Companies also designate blackout days, exclude popular locations like New York and Las Vegas, and reserve the right to terminate any given offer at any time.